Fundamental Comment

European shares snap gains after horrendous PMI data

European shares snap gains after horrendous PMI data

European shares snapped their earlier gains after the release of horrendous PMI data that confirmed that Europe is for sure heading towards a severe recession.

As of 08:55 GMT, the Euro Stoxx 50 index dipped 0.14 percent to trade near 2,830.55 points.

Britain’s FTSE 100 Index also descended to 5,761.48 points, bringing its rise today to about 0.14 percent.

The series of losses in the European stock market did not exclude the German DAX 30 index, which slumped about 0.32 percent and now settles near 10,386.87 points.

The French CAC did not join the selling wave, reaching 4,426.62 points, up 0.37 percent.

The euro area Composite PMI, including both manufacturing and services sectors, fell to an all-time low of 13.5 in April from March’s reading of 29.7.

In the U.K., the composite reading fell to 12.9 in April from 36.0 in March. It’s the worst reading since Markit started recording this data more than two decades ago.

The sharp fall in both manufacturing and services companies confirmed that the Covid-19 lockdown is pushing Europe into a severe recession.

However, most Asian stocks finished higher up on Thursday, supported by rising oil prices and the rise in US stocks after the US Senate passed an additional stimulus package to support small businesses and hospitals to contain corona effects.

Oil prices continued to recover during Thursday's trading, with Brent crude past the $21 barrier amid signs that producers were cutting supplies to deal with the collapse in demand.

West Texas Intermediate (WTI) crude futures traded at $14.96 per barrel, while the highest level recorded during the session was at 16.10, recording a rise of 7.90 percent.

The U.S. Energy Information Administration said yesterday that oil inventories rose by about 15 million barrels in the week ended April 17 to 518.6 million barrels, near the record high of 535 million barrels recorded in 2017.

U.S. oil production fell by 100,000 barrels per day to 12,200 million barrels per day last week.

Overnight, US stock indices rose nearly 2 percent at the close of trading on Wednesday, aided by the US Senate that passed a $484 billion additional stimulus package.

On Tuesday, the Senate voted on a $484 billion package to be sent to a vote in the House of Representatives on Thursday.

Senate Minority Leader Chuck Schumer confirmed the agreement with the White House on the stimulus deal earlier in the day.

The Dow Jones Industrial Average rose 2 percent to 23,475.8 points, or 456.9 points. The S&P 500 also rose 2.3 percent to 2,799.3 points, and the Nasdaq climbed 2.8 percent to 8,495.3 points.

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